WASHINGTON, DC – Dispelling the myth that poverty is the biggest barrier to saving, the latest figures from a five-year program indicate that 85,000 low-income youth in four countries, Nepal, Kenya, Ghana and Colombia, have opened savings accounts designed specifically for and with them. While we must wait another year for final conclusions, preliminary data indicates that YouthSave is contributing to the goal of financial inclusion for a particularly vulnerable population.
As of February 2013, 40% of YouthSave account holders were living on less than USD 2.50 a day and 13% were living on less than USD 1.25 per day. Considering this, and the fact that the majority of youth participating in this innovative project have no steady income, their saving behavior demonstrates the need to think strategically about poverty alleviation and develop specific products and programs for vulnerable segments of the population.
Project findings to date also suggest that young people have significant unrecognized economic potential. They provide useful guidance for organizations and policymakers seeking to ensure access to positive social and economic pathways for 1.8 billion youth between the ages of 10 and 24 – the world’s largest generation.
Created in partnership with The MasterCard Foundation, YouthSave is led by Save the Children in collaboration with the Center for Social Development at Washington University in St. Louis, the New America Foundation and the Consultative Group to Assist the Poor (CGAP).
According to Rani Deshpande, YouthSave’s Project Director, “well-designed youth savings products are effective tools to encourage asset building, promoting social and economic advancement for youth savers and their families.”
As one youth savings account holder in Nepal put it, “Now when we find even a rupee or two, we save it!” One rupee, shilling, cedi and peso at a time, youth as young as 10 are slowly saving their way to a better future. With the aim of covering education-related expenses, helping with family emergencies and even possibly investing in a future business, YouthSave youth are building assets and habits. The latter, many contend, may be the most important to poverty reduction efforts because it can lead to youth developing a positive mindset about their future prospects.
The YouthSave initiative aims to provide savings knowledge and access to formal savings accounts for low-income youth, through partnerships with local financial institutions. The project has an important research component that documents savings outcomes and investigates their role in improved cognitive, educational and health-related outcomes. The research also explores the business rationale for financial service providers to offer savings products to youth on a commercial basis.